Blackhawk Indus. Prod. Group v. U.S. Gen. Serv.

• Decision Date: 09 December 2004
• Docket Number: No. CIV.A. 2:04CV383.,CIV.A. 2:04CV383.
• Citation: 348 F.Supp.2d 662
• Court: U.S. District Court — Eastern District of Virginia
• Parties: BLACKHAWK INDUSTRIES PRODUCTS GROUP UNLIMITED LLC, Plaintiff, v. UNITED STATES GENERAL SERVICES ADMINISTRATION, Defendant.

Page 662

348 F.Supp.2d 662

BLACKHAWK INDUSTRIES PRODUCTS GROUP UNLIMITED LLC, Plaintiff, v. UNITED STATES GENERAL SERVICES ADMINISTRATION, Defendant.

No. CIV.A. 2:04CV383.

United States District Court, E.D. Virginia, Norfolk Division.

December 9, 2004.

COPYRIGHT MATERIAL OMITTED

Thomas Brian Kelly, Esquire, Jerry L. Bowman, Esquire, Bowman Green Hampton & Kelly, PLLC, Chesapeake, Russell J. Gaspar, Esquire, Andrew J. Mohr, Esquire, Cohen Mohr LLP, Washington, DC, Counsel for Plaintiff.

Lawrence R. Leonard, Esquire, Managing Assistant United States Attorney, Norfolk, Counsel for Defendant United States.

Lee W. Crook, III, Esquire, Assistant Regional Counsel, Fort Worth, TX, Counsel for Defendant U.S. General Services Administration.

OPINION AND ORDER

MORGAN, Senior District Judge.

This matter comes before the Court on the General Services Administration's ("GSA") Motion to Dismiss, Doc. 26, pursuant to FED R. CIV. P. 12(b)(6). During a hearing conducted on October 29, 2004, the Court DENIED GSA's Motion to Dismiss. This Order explains the rationale for the ruling on the motion.

PROCEDURAL BACKGROUND

Blackhawk filed a Motion for a Preliminary Injunction along with a Motion for a Temporary Restraining Order ("TRO") on June 29, 2004. During a hearing conducted on July 1, 2004, the Court granted Blackhawk's Motion for a TRO, thereby temporarily enjoining GSA until July 12, 2004. On July 9, 2004, the Court entered an Agreed Order by the parties extending the TRO until July 23, 2004 and setting a hearing on the preliminary injunction for July 26, 2004. On July 9, 2004, GSA responded in opposition to Blackhawk's Motion for a Preliminary Injunction; Blackhawk replied on July 15, 2004. On July 26, 2004, a hearing was held at which the Court granted Blackhawk's Motion for a Preliminary Injunction. Jurisdictional issues were raised at the time and the Court ordered a hearing scheduled to address these concerns. On October 29, 2004 the Court held the hearing and DENIED GSA's Motion to Dismiss.

FACTUAL BACKGROUND¹,²

Blackhawk manufactures, markets, and sells tactical products including assault vests, equipment harnesses, packs, hydration systems, holsters, equipment and ammunition pouches, rifle slings, Kevlar gloves and similar items designed primarily for military combat use, but usable by law enforcement and related entities as well. (Noell AFF³ ¶ 2.) It is currently an approved supplier of such products through six Multiple Award Schedule ("MAS") contractors holding Federal Supply Group ("FSG") 84 Schedule contracts, and has been such since 1996. (Noell AFF ¶ 4.) These contracts allow federal agencies departments, and offices to order products such as Blackhawk's without having to complete the steps necessary for non-Schedule purchases. (Ex. B to Pl. MEMO⁴.) The Trade Agreements Act ("TAA") prohibits federal agencies from purchasing products from countries that have not signed the Agreement on Government Procurement ("AGP"). 19 U.S.C. § 2512. As implemented by the Federal Acquisition Regulations ("FAR"), the TAA does not apply to the "acquisitions of arms, ammunition, or war materials, or purchases indispensable for national security or for national defense purposes...." FAR § 25.401(a)(2) (Throughout this Order, the products listed in this regulation will be referred to collectively as "war materials.")⁵

In 2001, Blackhawk moved its production facility from Korea to Vietnam after allegedly confirming with GSA that Vietnam was an acceptable trading partner because it had entered into a Bilateral Trade Agreement with the United States in 2001. (Noell AFF ¶¶ 9, 10; Ex. 1 to 1st Stoker.⁶) To the extent GSA approved production in Vietnam, it was mistaken, except as to "war materials," because Vietnam has not signed the AGP. On October 8, 2003, Blackhawk contacted GSA concerning its threatened removal of Blackhawk's products from the FSG 84 Schedule because Vietnam was not an approved country under the TAA. (October 8, 2003 email correspondence, Ex. 7 to 1st Stoker.) On October 14, 2003, Blackhawk requested that GSA recognize an exemption from the TAA because its products were "war materials." (Ex. 8 to 1st Stoker.) GSA Regional Counsel Jerry Ann Foster determined that Blackhawk's evidence did not support the "war materials" exemption. (Ex. 16 to 1st Stoker.)

STANDARD OF REVIEW

The standards for dismissal under FED. R. CIV. P. 12(b)(1) and 12(b)(6) are slightly different. In the face of a 12(b)(1) motion, the burden falls on the plaintiff to prove that jurisdiction in this Court is proper. McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 80 L.Ed. 1135 (1936). The Court may "look beyond the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists." Capitol Leasing Co. v. FDIC, 999 F.2d 188, 191 (7th Cir.1993); see also Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir.1982). The Court must presume the factual allegations of the complaint as true, but it need not draw argumentative inferences in the plaintiff's favor. Com. of P.R. ex rel. Quiros v. Alfred Snapp & Sons, 632 F.2d 365 (4th Cir.1980), aff'd 458 U.S. 592, 102 S.Ct. 3260, 73 L.Ed.2d 995 (1982); see also DeBauche v. Va. Commonwealth Univ., 7 F.Supp.2d 718 (E.D.Va.1998).

SUMMARY

GSA's Motion to Dismiss is DENIED. This Court does have jurisdiction pursuant to 28 U.S.C. § 1331 to hear claims brought under the Administrative Procedure Act § 702 challenging agency action. The Contract Disputes Act is not applicable and thus Blackhawk's claim does not have to be brought in Federal Claims Court. The TAA does not preclude Blackhawk from bringing this claim. Additionally, Blackhawk has standing under the Administrative Procedure Act as Blackhawk satisfies both the constitutional and the prudential requirements. Further, the Contracting Officer's application of the "war materials" exemption is not committed to unfettered agency discretion, rather such application must be exercised consistent with law.

I. Jurisdiction

A. This Court does have jurisdiction pursuant to 28 U.S.C. § 1331 to hear claims brought under APA § 702 challenging agency action.

The Court has federal question jurisdiction pursuant to 28 U.S.C. § 1331 when a federal statute creates the cause of action or the plaintiff's right to relief depends on a substantial question of federal law. See Battle v. Seibels Bruce Ins. Co., 288 F.3d 596, 606-07 (4th Cir.2002). The APA does not on its own confer on the courts jurisdiction to review agency action. See Califano v. Sanders, 430 U.S. 99, 105, 97 S.Ct. 980, 51 L.Ed.2d 192 (1977). Instead, Congress conferred such jurisdiction when it amended § 1331 in 1976. See id.⁷ Thus, federal courts would have jurisdiction to hear claims arising from agency action brought under the APA unless a subsequent statute either conferred jurisdiction upon another court or specifically precluded district courts from having jurisdiction. See id.

Here, Blackhawk brings suit under the APA challenging agency action. Plaintiffs may challenge agency action under the APA even if a private right of action does not exist under relevant statute. Chrysler Corp. v. Brown, 441 U.S. 281, 317-18, 99 S.Ct. 1705, 60 L.Ed.2d 208 (1979) (holding that although no private right action exists under FOIA or under the Trade Secrets Act, a government contractor could sue under the APA to prevent disclosure of its employment information by the Defense Logistics Agency). Further, as the next sections of this Order will show, the TAA does not preclude district courts from hearing Blackhawk's claim, nor does the TAA confer jurisdiction upon another court.

GSA cites several cases for the proposition that the Court does not have jurisdiction pursuant to § 1331 to hear Blackhawk's claim. These cases are all inapplicable.

In Merrell Dow Pharmaceuticals, Inc. v. Thompson ("Merrell"), 478 U.S. 804, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986) the Supreme Court found that the Federal Food Drug and Cosmetic Act, id. at 810, 106 S.Ct. 3229, did not authorize a private right of action and held that the plaintiff could not assert federal jurisdiction on a state law claim simply because the alleged negligent action was a violation of a federal statute, id. at 817, 106 S.Ct. 3229. See also Mulcahey v. Columbia Organic Chems. Co. ("Mulcahey "), 29 F.3d 148 152 (4th Cir.1994) (finding no federal subject matter jurisdiction as the plaintiff had a state law claim in which a violation of the federal statute was as an element).

Here also, Congress did not create a private right of action under the TAA; however, unlike the plaintiff in Merrell who was asserting a state law claim, Blackhawk has a basis for federal jurisdiction pursuant to § 1331 and a right of action under APA § 702. Thus, Merrell is not controlling.

The test articulated in Healthtek Solutions, Inc. v. Fortis Ben. Ins. Co. ("Healthtek"), 274 F.Supp.2d 767 (E.D.Va.2003) supports Blackhawk's position. In Healthtek, the court cited Merrell and Mulcahey, finding no jurisdiction over the plaintiff's state law claim simply because the complaint mentioned a federal statute, HIPPA. Id. Further, the court interpreted Mulcahey to provide the following test: "federal question jurisdiction is proper only if: (1) the federal statute cited in the complaint provides for a private right of action, and (2) the plaintiff is not barred from utilizing the private right of action." Id. at 774.

Here, the APA, not the TAA, is the federal statute cited in the complaint. Further, it is the APA, not the TAA, that provides the private right of action under § 702, therefore part one of the test is satisfied. As to part two, while the TAA creates no private right of action, neither does it preclude such private action, as discussed in the section which follows.

B. The TAA does not preclude Blackhawk from bringing this claim.

Exceptions to judicial...